Cases on Marketing Strategies
__________________________________________________________________________
TAP’s Social Networks and Social Media Strategy
Author: Carlos Falcato
Instructor: Prof. Pedro Celeste
Dissertation submitted in partial fulfillment of requirements for the
degree of MSc in Business Administration, at the Universidade
ACKNOWLEDGEMENTS
After completing such an important step in my academic path, I realized how much effort, work and perseverance this thesis required. I am grateful that I was able to reach my objectives and do the best work I could, but that would have not been possible without the help and support of some individuals.
First, I would like to thank my family for the moral and brainstorm support, as well as my closest friends and seminar’s colleagues for listening to my concerns, ideas and helping me in whatever I needed.
Also, a special thank you to TAP and more specifically Dr. Luís Monteiro and Dra. Gilda Luís, from the marketing department, without whom I would not have been able to have such great insights and information about TAP.
Finally, a grateful thank you to Professor Pedro Celeste, who provided the guidance and feedback that was always essential for the development of the
ABSTRACT
Dissertation title: “TAP’s Social Networks and Social Media Strategy”
Author: Carlos Falcato
The airline industry, a fiercely competitive one, is investing in social media as a way of creating differentiation and customer attachment. TAP, the top Portuguese airline, with more than 200 daily flights and millions of passengers every year, is a pioneer in the social networks world. It has more than 160.000 page fans, users engage in conversations with the airline, and TAP had the vision of not only creating a new customer service channel, but also a community where one can ask for some information (rapidly answered in a maximum of 30 minutes), do online check-‐in and even book a ticket.
The aim of this thesis is for professors and students to understand the practices and the strategy that makes TAP’s social media successful, as well as understand how its users perceive not only the Facebook page but also the effects that it has on the company’s image. The dissertation is divided in two main parts: the case study (literature review, airline industry and TAP analysis) and the market research (where based on an online survey, the author reaches important conclusions about TAP’s strategy). At the end of these two parts, the author draws the main conclusions, limitations and suggestions for future research.
Overall, thanks to the thesis, and by using the teaching notes, students will be able to realize the importance of marketing and market research in the development of an accurate social media strategy, as well as its effects in an airline’s customer perception. Finally, the case study presents as main reasons for the airline’s success: TAP’s Facebook fans and high awareness, as well as its congruent practices and strategic vision. Thanks to their strategy, TAP is now seen as more modern, updated and closer to its customers.
RESUMO
Título da dissertação: A estratégia de redes sociais e social media na
TAP.
Autor : Carlos Falcato
O sector dos transportes aéreos, intensamente competitivo, está actualmente a investir em social media como uma maneira de criar diferenciação e ampliar o relacionamento com os clientes. TAP, a maior companhia aérea Portuguesa, com mais de 200 vôos diários e milhões de passageiros por ano, é uma pioneira no mundo das redes sociais. A empresa tem mais de 160.000 fãs no Facebook, onde os utilizadores participam activamente em conversações com a companhia e, mais do que isso, a TAP teve a visão de não apenas criar um novo canal de suporte ao cliente, mas também uma comunidade onde os utilizadores podem solicitar informações (rapidamente respondidas no prazo máximo de 30 minutos), fazer o check-‐in online e até mesmo reservar um bilhete.
Esta tese permite a professores e alunos compreender as práticas e a estratégia para as redes sociais, que tornaram a TAP um caso de sucesso, bem como entender como é que os utilizadores percepcionam a sua página de Facebook e os efeitos que a mesma tem sobre a imagem da empresa. A presente dissertação está dividida em duas partes principais: o estudo de caso (revisão de literatura, análise do sector e da TAP) e a pesquisa de mercado ( onde base num inquérito online , o autor chega a conclusões importantes sobre a estratégia da TAP). No final destes dois pontos, o autor delineia as principais conclusões, limitações e sugestões para futuras pesquisas.
No geral, graças à tese e utilizando as notas de ensino, os alunos serão capazes de perceber a importância do marketing e da pesquisa de mercado no desenvolvimento de uma estratégia efectiva de social media , bem como os seus efeitos ao nível da percepção do cliente em relação à respectiva companhia aérea. Finalmente, a dissertação apresenta como principais razões para o sucesso da companhia aérea Portuguesa nos social media, os (muitos) fãs da TAP no Facebook, o seu elevado reconhecimento , bem como as suas práticas congruentes e visão estratégica. Graças a esta mesma estratégia, a TAP é agora vista como mais moderna, actualizada e mais próxima dos seus clientes.
Table of Contents
ACKNOWLEDGEMENTS ... i ABSTRACT ... ii RESUMO ... iii 1. Introduction ... 3 2. Methodology ... 5 3. Literature Review ... 63.1 Branding in the digital age ... 6
3.2 Online Social Networks ... 7
3.2.1 Social Media ... 8
3.2.2 Determine influential users ... 9
3.2.3 Online Brand communities ... 10
3.2.4 Marketing capabilities gap ... 11
3.3 Word-‐of-‐Mouth (WOM) ... 12
3.3.1 Word-‐of-‐Mouth Marketing ... 12
3.3.2 Managerial implications ... 13
4. Case Study: TAP’s Social Networks and Social Media Strategy ... 15
4.1 TAP – The Portuguese airline ... 15
4.1.1 Short review of TAP’s history ... 15
4.1.2 TAP – A leading carrier ... 16
4.1.3 Airline industry’s main trends ... 18
4.2 TAP and the social media ... 19
4.2.1 Airline industry overview ... 19
4.2.2 TAP’s background ... 21
4.2.3 Social media practices at TAP ... 22
4.2.4 TAP’s social media data and performed activities ... 23
5. Market Research ... 26
5.1 Market Research Methodology ... 26
5.2 Results Analysis ... 28
5.2.1 Sample Analysis ... 28
5.2.2 Are people aware of TAP’s Facebook page? On average how frequently is it visited? ... 29
5.2.3 What are the main reasons that consumers find to visit TAP's Facebook page? ... 30
5.2.4 How do consumers perceive TAP’s Facebook page? What factors influence it the most? ... 31
5.2.5 Do TAP's Facebook page help improve its image and the way consumers see it? What are the factors that influence a better evaluation on the change? ... 33
6. Teaching Notes ... 36
6.1. Case study synopsis ... 36
6.2. Target audience and teaching objectives ... 36
6.3 Teaching plan ... 36
6.4 In class discussion: Part 1 ... 37
6.5. In class discussion: Part 2 ... 40
APPENDIX ... 46
Exhibit 1 – Map of TAP’s destinations ... 46
Exhibit 2 – TAP Group chart ... 46
Exhibit 3 – Airline Industry five forces of Porter ... 47
Exhibit 4 -‐ Top Facebook brand pages in terms of fans ... 48
Exhibit 5-‐ TOP fan’s nationalities ... 49
Exhibit 6 – Visitants’ demographic profile ... 49
Exhibit 7 – Visitant’s geographic origin ... 49
Exhibit 8 – Top Tab views ... 50
Exhibit 9 – TAP’s Facebook snapshots ... 51
Exhibit 10 – Online survey questions ... 54
Exhibit 11 – Sample demographic charts ... 57
Exhibit 12 – Sample social platform’s usage ... 58
Exhibit 13 – Visited airlines frequencies ... 58
Exhibit 14 – “Being a Fan” Frequencies ... 60
Exhibit 15 – Crosstab Fan*Visited Ryanair &Visited Easy jet ... 60
Exhibit 16 -‐ “Never Visited” Frequencies ... 61
Exhibit 17 – Number of visits’ frequencies ... 61
Exhibit 18 – Number of visits: regression analysis ... 62
Exhibit 19 – Crosstab between “being a fan” and frequency of visits ... 63
Exhibit 20 – Reasons to visit frequencies ... 64
Exhibit 21 – “Rank reasons to visit” frequencies ... 65
Exhibit 22 – “Rank reasons to visit” frequencies simplified ... 65
Exhibit 23 – Semantic Differential Scale Frequencies ... 66
Exhibit 24 – A-‐Nova Analysis for Semantic Differential Scale ... 66
Exhibit 25 – Regression Analysis Semantic Differential Scale ... 68
Exhibit 26 -‐ Change in image correlations ... 70
Exhibit 27 – Change in image frequencies ... 70
Exhibit 28 – Change in image matrix score card ... 70
Exhibit 29 -‐ Regression analysis -‐ change in image ... 71
Exhibit 30 – A-‐Nova Change in image/fan ... 74
Exhibit 31 – A-‐Nova Change in image / Nº of visits ... 74
8. References ... 75
1. Introduction
Nowadays, social networks and social media are everywhere. It is a way for people to be connected and updated about their friends’ lives, to share ideas and thoughts and, overall, to communicate. Furthermore, it did not take too long for companies to realize the opportunities that this new platform could bring, and while consumers are having conversations and expressing their feelings about the brands, companies are listening and trying to engage them.
Facebook and Twitter are the top social media platforms when it comes to the number of worldwide users and the buzz it creates. The airline industry is one of the most valuable, competitive and consumer based industries in the entire world. Therefore, the author decided to cross social media (Facebook and Twitter) with a top national airline that was a pioneer in the use of social networks, so that several lessons could be taken and a good example would be documented – the chosen company was the Portuguese TAP.
Although TAP started quite gradually in the social media, after a crisis management event (the Iceland’s volcano ashes in March 2010) the company rapidly invested resources, assigned teams to manage Facebook and truly started using it in a strategic way, instead of just being present like many competitors. TAP was an international pioneer. If one visits its Facebook page and, for instance, poses a question in the wall, it is promptly answered in a maximum of 30 minutes. Moreover, it provides excellent customer service, its Facebook dedicated promotions are successful and, foremost, the users do engage in conversations about and with TAP. It is not by chance that TAP’s page has more than 160.000 fans and it is the 15th with the most fans in Portugal.
Within this case study, TAP’s social media “backstage” -‐ how they achieve this success-‐ will be the object of study. Also, this will be the part that students will have right away access. On the other part (given after the students make their own studies, due to being the author’s personal analysis), through several research questions, the author investigates why TAP is indeed successful, while deeply studying its user’s profile. In order to do these investigations and answer the research questions stated bellow, the author conducted a quantitative analysis based on data from an online survey. The results from the market
research offer important conclusions that help solving the research questions and ultimately provide insights on the problem statement.
Problem statement
The goal of this study is to analyse why TAP is indeed successful, to understand how the user’s perceive the page and ultimately the company after their social media strategy. Moreover, to learn more about TAP’s Facebook users profile.
Research Questions
1) Are people aware of TAP's Facebook page? On average, how frequently is it visited?
2) What are the main reasons that consumers find to visit TAP's Facebook page? 3) How do consumers perceive TAP's Facebook page? What factors influence it
the most?
4) Do TAP's Facebook page help improve its image and the way consumers see it? What are the factors that influence a better evaluation on the change?
The structure of this case study is made for the reader to have first a theoretical overview, then a deep analysis of the company and its social media strategy along with an industry overview, and finally the market research and its conclusions. In a more detailed view, the case study will start with the methodology chapter, followed by the literature review, company and industry analysis, market research and finally the conclusions, limitations and hints for future research.
2. Methodology
The used methodology for all the case study was influenced by the circumstances and informational needs that were appearing as the author was conducting its analysis. The first principle was to always have reliable sources of information and material that was current, as marketing and the social media are areas that change in time and where the up-‐to-‐date data and occurrences are crucial. Many online sources were used and will be described in the references chapter. On the other hand, it is very important to note the inside TAP information that was provided by the airline’s marketing department, which was then adapted, studied and used in the present case. Overall, the used method was the funnel one, which starts with theory, the industry and the company, and then the problem statement. Thanks to this method, the author was able to gradually and efficiently be evolved by the theme while progressively gaining knowledge that allowed the problem statement and research questions to be answered in a complete way.
The Literature review methodology will be further explained in the literature review chapter, however the main method was to read at least 15 articles (mostly from top marketing journals) while gathering the needed information. The chosen themes were: Branding in the digital age, Social networks and Word-‐of-‐mouth.
Finally, the methodology used for the market research when it comes to the collection method was an online survey and the data analysis was performed on excel and SPSS. Moreover, due to its specificity and logic reasons, the detailed market research methodology is explained on the respective chapter.
3. Literature Review
The literature review is the theoretical basis for the whole case study. In this chapter, the author analyses three main themes that will be further applied in the rest of the thesis: Branding in the digital age, Social networks and Word-‐ of-‐mouth. The reason behind the choice of these three main topics comes from the importance of studying the brand (TAP) applied to the digital age, the social networks (TAP’s Facebook page) and all the dynamics following it, and finally the importance of the word-‐of-‐mouth for the company’s social media and marketing strategy. The review will start with the branding part, then the social networks and social media, on which the determination of influential users will also be studied. Furthermore, online brand communities and then word-‐of – mouth will be covered topics.
Keywords: Branding; Social Networks; Social Media; Brand Communities; Online; Internet; Word-‐of-‐mouth.
3.1 Branding in the digital age
Brands represent for customers a simplified choice, the promise of a certain quality level, trust and reduced risk (Keller and Lehmann 2006). Branding relates to the management of the brand and to the exploration of its value. However, thanks to the globalization, this is no longer a local activity. As Levitt (1983) has affirmed in the eighties, companies should operate as if the world were one single large market. Furthermore, a lot has changed in the way consumers perceive brands and react with them. Actually, the Internet, through its new media channels, engaged consumers with the brands well beyond the companies’ control. Indeed, after a purchase, according to their experience, consumers will remain attached to the products by either promoting or backlashing, to the entire online world, the brand (Edelman 2010). Moreover, customers increasingly perceive brands as shared cultural property rather than as privately owned, while feeling that they belong to them and not to the companies that supposedly own them (Cova and White 2010).
According to Edelman (2010), this digital age also comes with opportunities for marketers. Considering that customers are exposing themselves online, revealing their opinions as well as characteristics, personality and demographics, this is an opportunity for managers to collect information and gather more insights about the market. Nevertheless, it is important to be prepared for this vague of information and to manage it, so that instead of causing confusion, it is used in a strategic way.
Overall, brand management has changed with the explosion of online social networks, where its users share and participate in conversations about the brands they love or hate. Also, marketers have more information to deal with, but also new opportunities have arisen. Therefore, the key is to be ubiquitous and never loose sight of what is being said, although in a way that customers do not feel too much in control.
3.2 Online Social Networks
Technology has been steadily changing social interactions among people. Nowadays, people spend on average more time communicating through technology platforms (cell phone, VoIP, e-‐mail, online chat) and their frequent contacts are easily available to the ones who own these platforms (Katona, Zubcsek and Sarvary 2011). At the same time, social network websites are ruling the online world, with more than 90% of all teenagers and young adults in the United States being currently actively enrolled in them (Trusov, Bodapati and Bucklin 2010).
In a social network website, users have profiles where they display their demographics and interests, edited at their own taste (Katona, Zubcsek and Sarvary 2011). The core of a social network website are the connections between registered users and the information that they share among them. Within this websites, the content is entirely user generated and its attractiveness and vitality comes from the amount of generated content and number of participants. Overall, users perform two main activities: create new content (post pictures, share videos, new status) and consume content that their connections produce. These social websites are commonly free to use, therefore
the most popular business model is based on advertising, where revenue is earned either based on showing the advertisements or by the number of each click/action on the ad (Trusov, Bodapati and Bucklin 2010).
3.2.1 Social Media
Social media relates to the use of online social platforms (and others) to create an interactive conversation, and its explosive growth has not been indifferent to marketers, who are heavily investing in this new exciting platform. Moreover, managers are interested in the networking value when it comes to the word-‐of-‐mouth and the adoption or purchase of a product. In a matter of fact, consulting firm McKinsey & Company conducted a study, which showed that word-‐of-‐mouth (nowadays much effective thanks to the social media) is the primary factor behind 20 to 50 percent of all purchase decisions (Duboff and Wilkerson 2010). Overall, social media can increase brand awareness, trial and ultimately sales, but most importantly it allows the marketer to gain consumer insights and feedback as never before (Barwise and Meehan 2010). Social technologies are also changing the relationship between the consumer and the brand (Spenner 2010). Consumers feel like they own the brands and will proactively participate in their improvements, new launches and rising problems, while saying whatever is on their minds through their social platform’s profiles (Edelman 2010).
Although every company should monitor brand reputation and be ready to respond to any threat within social media, not everyone should invest in it (Duboff and Wilkerson 2010). Social media makes it even more urgent for companies to develop a clear brand promise and to be truthful to it. In such a fast paced social media era, it is too risky for companies to disappoint and anger customers, which will most probably create a costly backlash (Barwise and Meehan 2010).
Concerning the best approach, according to Barwise and Meehan (2010) when starting in the social media, companies should have a clear strategy based on the brand promise; use social media primarily for insights (although there are a lot of things besides collecting information, the real value at this first stage is to learn about customers); strive to go viral but protect the brand (viral campaigns
improve sales and excitement about the brand, however companies should not do this at any cost -‐ it is essential that they are always authentic and relevant); engage but follow the social rules (do not attempt to moderate or control too much the conversations between the users); participate only if they allow it (too much control or influence in the conversations might have serious negative results).
3.2.2 Determine influential users
The success of Internet social networking websites depends on the level of activity and number of its active users. Although typically every user has many connections (“friends”), only a fraction influence the other members’ website usage (Trusov, Bodapati and Bucklin 2010). Furthermore, marketers believe that the efficient way of using social networks relies on influencing word-‐ of-‐ mouth, through the analysis of member’s connections. The assumption behind this belief is that this analysis of the network, would help identify customers that are influencers and therefore predict consumer’s adoption probabilities (Katona, Zubcsek and Sarvary 2011). Therefore, thanks to the online social networks and its easiness to track and gather information, several authors conducted numerous studies to find who are the influencers among the online social network community. The results are that female members have a greater influence than male; higher number of “friends” does not mean higher influence power, instead it dilutes the individual’s influential power; having more “friends” that adopted a certain product increases the probability of a potential adopter to adopt; users from the same ethnicity are more influencing and finally, older users are less persuading (Trusov, Bodapati and Bucklin 2010; Katona, Zubcsek and Sarvary 2011).
Overall, it is clear that demographics represent a good factor to use when identifying the influencers and that having many friends in the network does not translate in high influencing power. Marketers should then try to target their viral marketing campaigns to individuals that will spread easier and faster their message (influencers) and not just to everyone or the ones that have more member connections (Trusov, Bodapati and Bucklin 2010).
3.2.3 Online Brand communities
Very much related to the digital age, branding and social networks are the brand communities that have proliferated online.
Brand communities are a specialized, non-‐geographically bound community based on shared consciousness, rituals, traditions and a sense of moral responsibility among the users of a brand ( Muñiz and O’Guinn 2000). However, online brand communities go a little further. An online community can be defined as a group of people who communicate and create bonds, through electronic means. These communities are not constrained by time or space and allow communication between a large number of participants (Kim, Choi, Qualls and Han 2008). Thanks to the growth of online social network websites and the easiness people have to connect with each other, communities are growing at a fast pace and marketers are more attentive than ever. The truth is that community is a strong and rewarding strategy if managed the right way: it increases customer loyalty, lowers costs, activates the brand, engages customers and offers consumer information and insights (Fournier and Lee 2009).
Within these communities, consumers create relationships, share feelings, participate in brand activities, and give ideas. According to Kim, Choi, Qualls and Han (2008), contribution in the community takes two forms: active and passive participation. In the active participation users provide information, whereas in the passive one, they define what brings value to the group. It is important for both the positions, that users feel listened and recognized by their peers. Also, it is crucial that the company who own the brand does not exert excessive control, or serious damages might occur (Fournier and Lee 2009). This is a place for freedom of speech, where after daily or weekly contact, friendships and trust are created, which might result in the community, after several years, dispossessing itself and going beyond the brand boundaries ( Schau, Muñiz Jr and Arnould 2009).
Overall, findings are that online communities can assist a brand in building strong relationships with customers, who are then more likely to buy repeatedly and spread positive word-‐of-‐mouth. Also, customers will happily participate in activities promoted by the company while giving feedback and opinions that
might improve the corporation ( Kim, Choi, Qualls and Han 2008; Schau, Muñiz Jr and Arnould 2009; Cova and White 2010). Nevertheless, the organization should provide the right means for the community’s development.
However, in order for a real community to exist, there is the need of having a strong infrastructure that allows its users to interact with each other in an easy and fluid way. Marketing managers should show appreciation for the user’s opinion, by rewarding their contribution properly. Also, rather than attempting to control what is being said, corporations should be open to negative comments and complaints and be really focused on their consumers’ individual and social needs. They should see customers as co-‐creators and manage the group with a light, open touch while being committed to induce value (Kim, Choi, Qualls and Han 2008; Fournier and Lee 2009).
Shortly, online brand communities represent a world of opportunities. However, they should be supported by high-‐level strategies that will make them genuine, authentic and valuable for both the customers and the company.
3.2.4 Marketing capabilities gap
Although very exciting and dynamic, social media is changing the industry at two main levels: the way companies deal with its customers and the amount of generated information. Communication vehicles are augmented, traditional brand management models are starting to feel outdated and the forces of market fragmentation and change, leads to the marketers struggling to keep up (Day 2011).
According to Spenner (2010) today, brand marketers need to be skilled to coordinate a variety of marketing and customer–facing activities and to be experts on online social platforms. They need to work on short time frames, sometimes with daily cycles, while searching to answer for new opportunities or threats. New and updated talent is needed in order to deal with this fast changing environment and complexity. According to Day (2011) three adaptive capabilities are needed: 1) vigilant marketing learning processes that will constantly update the company with new information and warn the managers when change is coming; 2) adaptive market experimentation that uninterruptedly learns from experiments; 3) open-‐marketing that creates bonds
with the new media and social networking technologies and activates the skills of current partners.
Generally, companies will need to be attentive to the fast environmental change in order to keep their competitive advantages, be protected from threats and explore new opportunities.
3.3 Word-‐of-‐Mouth (WOM)
Word-‐of-‐mouth is no recent theme in marketing. However, the Internet and its easy access, reach and transparency helped fuel the modern marketer’s enthusiasm in influencing and monitoring WOM as never before (Kozinets, de Valck, Wojnicki and Wilner 2010). Moreover, social networks became one of the top channels to generate buzz and consumers’ conversations.
3.3.1 Word-‐of-‐Mouth Marketing
Word-‐of-‐Mouth Marketing (WOMM) is the intentional and professional manipulation of consumer-‐to-‐consumer communications (Kozinets, de Valck, Wojnicki and Wilner 2010). This marketing strategy is very appealing because it easily overcomes the clutter and consumers’ resistance not only at a very attractive low cost, but also in a short period of time (Trusov, Bucklin and Pauwels 2009).
Through time, three different WOMM models and practices being perpetuated within the marketing circles (Kozinets, de Valck, Wojnicki and Wilner 2010) : It all started with Ryan and Gross’s (1943) diffusion study and their conclusion that the buyer-‐to-‐buyer communications had more influencing power in the adoption than the traditional marketing undertakings. According to them, the exposure to mass communication aligned with the influence of well-‐established peers, is the key to adoption. At this time, WOM was organic, with no external influence or monitoring. This model is called the organic inter-‐consumer influence model.
In the second model (The linear marketer influence model), marketers realized the importance of identifying the most influential and respected consumers (e.g. market mavens (Feick and Price 1987)), which helped spread WOM and impact
other’s decisions. This attentiveness came from the interest in influencing these consumers through the use of advertising and promotions, in order to facilitate mass adoption or purchase.
The third and modern overview is all about directly affecting WOM through specific marketing strategies and communication programs. The Internet is the perfect and unprecedented playground, due to the possibility of having detailed tracking information (Trusov, Bucklin and Pauwels 2009) that facilitates the management and measurement of the whole marketing campaign while improving the word-‐of-‐mouth marketing knowledge.
Nevertheless, when a company stimulates word-‐of-‐mouth, it is no longer organic which will probably affect its effectiveness. Although there is not much information about its differences, one can predict that the success levels of “fertilized” (influenced) WOM will be lower than the organic ones (Trusov, Bucklin and Pauwels 2009).
3.3.2 Managerial implications
According to Kozinets, de Valck, Wojnicki and Wilner (2010), WOM communication is influenced by four main factors. The first one is the way it is affected by the placement into “character narratives” or enduring personal stories that might be understood as being related to a particular expressed character type. Second, WOM communications take place in many diverse forums (e.g. dinner parties, bars, social networking websites), and managers should always be attentive to their differences. The third factor relates the changing norms when it comes to the communication. Meaning, some expressions and messages might have different interpretations according to the type of community, demographic characteristics, and lifestyles among others. Finally, the fourth factor relates to the influence that the product/service characteristics, brand equity, ongoing promotions and the promotional WOMM itself, might have on the message and the WOM communication meanings.
When it comes to the actual findings about this topic, Trusov, Bucklin and Pauwels (2009) found empirical evidence that when compared with traditional marketing activities (events; media effects), WOM referrals result in a larger
short-‐term response and a more lasting carryover effect. Indeed, WOM marketing is among the most effective marketing strategies. Nevertheless, managers should not be guided by common sense, especially when it encourages them to magnify positive and minimize negative WOM regarding their companies. In a matter of fact, recent research has found that successful WOMM campaigns include more than simply positive messages (Schlosser 2005). Furthermore, Liu (2006) affirms that the volume of WOM mentions is far more important in predicting a product’s success, than merely the amount of positive messages versus negative ones. However, Marketers should be aware of the high risks that come from attempting to influence online WOM (where everything is spread a lot faster). Therefore, the company should invest in a clear, honest and genuine dialogue in order to protect itself from backlash.
4. Case Study: TAP’s Social Networks and Social Media
Strategy
4.1 TAP – The Portuguese airline
4.1.1 Short review of TAP’s history
Founded in 1945 as “Transportes Aéreos Portugueses” and as a section of the “Secretariado da Aeronáutica Civil”, TAP inaugurated its first flight in 1946 from Lisbon to Madrid. In the 31st of December of that same year, it starts
operating the route Lisbon-‐Luanda-‐Lourenço Marques (current Maputo), which took 15 days (round trip) and 12 stops along the way, making it the longest world route operated with a DC-‐3. The first Boeing (B727) then arrives in 1967, while the last Super Constelation is withdrawn from the fleet, making TAP the first European company working solely with jets. In 1974, TAP served more than 40 destinations, located in 4 continents, with a fleet of 32 modern aircrafts. TAP then became a public company in 1975 and in 1979 a modernization program is implemented along with a new company designation: TAP-‐Air Portugal.
The company creates its first website in 1996 and thanks to its operational work with the A340, it gains from Airbus the Award for Operational Excellence. The hub strategy, with the Lisbon airport being the centre of all operations, is implemented in 2001. In 2003 Grupo Tap is created, while a new institutional image for the company is then presented in 2005 along with the integration in Star Alliance, the largest global airline association. Then in 2007, the company acquires Portugália – Companhia Portuguesa de Transportes Aéreos, a regional Portuguese airline company. Moreover in 2008, TAP starts emitting flight tickets solely in electronic format and launches the innovative “1 voo, 5 formas de viajar ”(1 flight, 5 ways of travelling). This program basically segments the plane in 5 different segments (executive, plus, classic, basic and discount) according to the customer’s willingness to pay and comfort/exclusivity needs. Finally in 2009, TAP is the first airline worldwide to launch a CO2 compensation program that
based on the type of flight (duration, aircraft, class), it calculates the cost to compensate the produced carbon and buy a carbon credit.
4.1.2 TAP – A leading carrier
TAP is the main Portuguese airline company. It is a Star Alliance member and currently 65 destinations in 31 countries from Europe, Africa, North, Central and South America are offered (see exhibit 1, p. 49). The fleet is composed by 55 airbus planes with an average life of 9,5 years, that transport passengers to 260 daily destinies.
TAP (that is the focus of this case study) is part of the TAP Group, which also owns TAPSer, PGA, AERO-‐LB and 49% of GroundForce, and provides services such as maintenance and engineering, catering, cargo and airport services (see exhibit 2, p. 49). TAP currently employs 4582 people, with more than a half working on air and others on the ground.
The company is the international leading carrier from Europe to Brazil and won, again, in 2010 the Word’s Leading Airline to South America travel award along with the Condé Nast Traveller distinction as the world’s best airline. The airline has a niche strategy based on customer focus and cost efficiency. The customer emphasis is based on making the passenger’s travel experience the best as possible, while travelling easily and safely. On the other hand, cost efficiency leads to market competition and economic efficiency, which is highly needed in such a fiercely competitive industry.
TAP offers five different products to diverse segments: tap executive, tap plus, tap classic, tap basic and tap discount. These products differ in price, extra services, seat place and other. Basically, the basis for this division is the different willingness to pay and the extra services/exclusivity needs. When it comes to its target market, although very broad, it has one specificity: their customers prefer to travel on TAP than on a low-‐cost company.
Currently, 2010 was a record in terms of number of passengers (more than 9 million) and capacity utilization (74,5% of taken seats – plus 6% than 2009). However, the costs of fuel (523 millions of euros – plus 48% than 2009), the eruption of the island volcano and its ash cloud, and the air controllers’ strikes that proliferated across Europe, had a very negative impact in what could have been a great year for TAP. As for 2011, the costs from the fuel should be
even worst: TAP already reported for the first semester of 2011, fuel costs around 325 million euros (plus 43% than the same period in 2010).
The sales volume was about 1.995,3 millions of euros (more 12,4 % than 2009), there were more flight hours (up to 229.703 thousands of hours – more 3,7% than 2009), the net income raised to 62,3 millions of euros (more 2,3 millions than in 2009). The largest stake of costs comes from the fuel and the human resources, which have a great power and influence in the company.
When it comes to the tickets sold in 2010, the largest purchasing markets were Europe (35,8% of all tickets), Portugal (30,8%), Atlantic South (21 %) and Africa (6,6%). Concerning the traffic, the Atlantic South was the one with highest (thanks to Brazil), followed by the Europe (35,1%) and Africa ( 11,3%).
The year of 2010, represented also an important period for Marketing, social platforms and e-‐commerce. TAP launched its highly successful new signature “De braços abertos” (“with arms wide open), that is based on the union of the Portuguese speaking cultures. This campaign had a song created especially for it, which was sang by the Portuguese star Mariza, the Angolan Paulo Flores and the Brazilian Roberta Sá, and rapidly became the anthem for the proximity and complement between this cultures. With this campaign, TAP became more than a simple airline transportation company. It became the link between cultures, while adding value and meaning to it.
When it comes to the e-‐commerce, the online bookings generated 196 millions of euros, which represents 820.000 passengers and an increase of 28,4% from the year before. Moreover, the Internet represents 9% of TAP’s global sales market, with the Portuguese and Brazilian markets representing the largest stake. Finally, in 2010 the Fly TAP website (already available in 25 countries) becomes available in Romaine and Greece.
For the next few years, TAP’s main commercial vectors are to maintain and reinforce the investments in Brazil and Africa, due to their growing economies and TAP’s top position, as they did with creation of new routes ( Porto Alegre, Brazil; Bamako, Mali; Acra, Gana; S.Vicente, Cape Verde) and increase of frequency to others (Argel) ; to continue focusing on the customer relationship and engagement through the Victoria program ( frequent flyer “loyalty” program), and keep the commercial model based on the 5 ways of
travelling.
Lastly, the future of TAP is quite uncertain, as its privatization is expected to happen as soon as in the first semester of 2012. However, the company does not seem too worried and keeps investing and working to improve as never before.
4.1.3 Airline industry’s main trends
In order to understand TAP’s current situation and what one can expect for its future, it is important to analyse the main tendencies for all the industry. Overall, the main trends for the airline industry will be:
• Emerging economies like the BRIC’s should be where the opportunities for growth remain, thanks to their economic and demographic developments. Business passengers as well as leisure ones are expected to grow as their purchasing power continues to increase and the economy flourishes.
• The liberalization of the aviation markets will also be an important trend. Markets are starting to be more open and, for example, many countries made agreements that allows for international companies to operate in domestic flights (e.g. E.U. and the U.S.).
• The growth of low cost carriers – intensively expanding into to Asian-‐Pacific routes – is something traditional airlines need to take into account. Consumers are more and more informed about the industry, which leads to high price sensitivity. Therefore companies need to keep reducing their costs and finding ways to differentiate themselves.
• The demand for more fuel effective planes like the Boeing 787 Dreamliner is also a current trend as fuel prices are very elevated and represent a great stake in the operating costs.
Generally, the main things to retain are that airlines are fighting to keep low costs so that they can offer low prices and still be competitive; BRIC’s should be the future growth path and advantage should be taken on the more liberalized air markets.
In order to better analyse the industry, the author also did a five forces of Porter analysis (see exhibit 3, page 50). Its main conclusions are that the airline